To mark our 25th anniversary we are pleased to treat you with the 25th and special edition of ‘Things we see in retail and loyalty’. The newsletter was first distributed to our clients and partners in May 2018, and since then has catapulted itself to a well-loved monthly newsletter, that our clients and partners love to receive in their mailbox. Read more to discover highlights of this newsletter with insights of decades of retail and loyalty and request the full newsletter via the link below this article.
At the end of the 18th century, some merchants gave their customers copper tokens to redeem for future purchases. The idea behind this was to give the customers something beforehand so they would come back later. These merchants were the pioneers of customer loyalty programmes and the idea has quickly gained popularity in the 19th century.
At the end of the 19th century, retailers found a cheaper customer retention tool in the form of stamps. Therefore, the coins were replaced which saved the retailer the investment while having the same effect. This is the foundation of the loyalty programmes as we know them today.
According to the Smithsonian Institute, the first supermarket in the USA is the King Kullen concept, founded in 1930. Although there is debate whether other retailers could be defined as a supermarket in earlier years, the institute states that King Kullen was the first to fulfil all criteria of a modern supermarket: separate departments, self-service, discount pricing, chain marketing, and volume dealing. Interestingly, the founder of King Kullen, Michael Cullen, was a branch manager at Kroger Grocery & Bakery before he started his own concept with a mass merchandising, high-volume and low-margin model. He pitched his idea to the president of Kroger but was ignored. After setting it up himself, King Kullen became an instant success and still operates at 29 locations nowadays.
In 1990, the average supermarket in the US let its shoppers choose between approximately 7000 products. Over the years, we experienced an expanding diversity in product width, as the average US supermarket offers between 40,000 and 50,000 products. Of course, this resulted from with the changing tastes and desires of consumers who demand an expanded product range to choose from.
For a long time, the stamps were the dominating factor in loyalty, but in the 1990’s, retailers wanted to implement in-store loyalty that was easier to monitor and analyse than the collection of stamps or branded currency. The solution to this problem was the loyalty card that is still popular today. One of the first loyalty card programmes, called Clubcard Rewards, was introduced by Tesco in the UK.
Retail is not just about selling products anymore. To tie shoppers to their brand and diversify from competitors, retailers are increasingly investing in selling experiences instead of items. One extreme example we featured was a German supermarket with a Michelin-star restaurant in its basement. Whole Foods installed a robot barista in one of its new stores with the goal of achieving a sales bump. Another trend that contributed heavily to in-store experiences was the use of indoor vertical farming. A German company called Infarm is working together with retailers like Aldi Süd, Albert Heijn and Mark & Spencer. This corresponds to a retailer’s transparency on where products come from and the importance of ‘fresh’. The same has been seen at a Checkers Hyper in South Africa which revealed a new flagship store with a look and feel of an artisanal market, featuring an open-flame pizza oven, chocolatier bar and product departments. It shows that the importance of in-store experience to gain the loyalty of shoppers is growing.
Technology is developing rapidly, especially in the world of food retail. Sobeys tested a smart shopping cart that automatically scans and checks out products. Alternative payment methods made their way into retail as well; Magnit expanded the use of facial recognition payments and Wholefoods has tested a hand recognition payment system. We also noticed that the use of payment with wearables (e.g. smartwatches) is taking off, especially in Europe. Some technologies even give us a glimpse into a possible future, with digital screens on fridge doors at Walgreens and 3D holograms at a Żabka store.
The world is facing one of the most challenging times since World War II and consumer behaviour has dramatically changed from one day to another. Retailers have responded quickly and thoroughly to the novel COVID-19 crisis, demonstrating that they are one of the key cornerstones of society. Retailers adapted quickly to the changing consumers' needs, installed drastic measures to battle the COVID-19 crisis and to ensure in-store safety. Despite retailers impressively adjusting to consumers' needs, the COVID-19 crisis is expected to turn into massive economic aftermath.
Read more about the history, trends, and future of retail and loyalty by requesting the special edition of the 'Things we see in retail & loyalty' newsletter below.
With the lifting of lockdown restrictions, more and more consumers are having ‘first-time’ experiences. For example, the ability to invite friends over again for a dinner party or go outside for a large family picnic after months of lockdown.
As our consumer research shows, once emerged from a crisis, consumers appreciate the retailers that supported them with learning new skills and having new experiences. These ‘first-time experiences’ have a high emotional value with consumers, where retailers can react with concepts that connect to these emotions and tap into the need for consumers to be taught new skills by retailers.
Read more about these emotional values by requesting the special edition of the 'Things we see in retail & loyalty' newsletter below.
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To learn more about the 5 themes retailers must consider to stay relevant after COVID-19, read the article about food retail's new normal.
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